Realistic ROI Forecasts

It’s always easier to buy something when you are confident you’ll benefit from that purchase. And when you can see a return on your investment in months instead of years its even easier. Trouble is forecasting of ROI with any degree of accuracy is difficult. It requires a complex set of calculations that cover virtually every facet of your business. To help we’ve created a high end tool for calculating ROI that makes it relatively simple too see what effect purchasing AdvancePro will have on your bottom line.

True ROI in Less Than 3 Months

The sample we’ve provided below uses data that is typical for a business running AdvancePro and covers a period of six months. There was no need to go beyond this period since payback usually begins in less than three months.

[wptabs] [wptabtitle]Errors[/wptabtitle] [wptabcontent]Shipping errors are costly we all know that. But when you can see just how much you might be surprised.

ERRORS
Cost of Errors Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Total
Number of Shipping Errors Per Week 2.0 2.1 2.2 2.3 2.4 2.6
Average Cost of a Shipping Error $55.00 $55.00 $55.00 $55.00 $55.00 $55.00
Expected Monthly Sales Variance 5% 5% 5% 5% 5% 5%
Shipping Errors per Yr. without AdvancePro 8.7 9.1 9.5 10.0 10.5 11.1
Cost of Shipping Errors without AdvancePro $476 $500 $525 $551 $579 $608
Reduction in Shipping Errors w AdvancePro 75% 75% 75% 75% 75% 75%
Shipping Errors per Yr. w AdvancePro 2.2 2.3 2.4 2.5 2.6 2.8
Total Cost of Shipping Errors w AdvancePro $119 $125 $131 $138 $145 $152
Error Reduction Cost Savings $357 $375 $394 $414 $434 $456 $2,430
[/wptabcontent] [wptabtitle]Inventory[/wptabtitle] [wptabcontent]Inventory management is more than just knowing what you have in stock and what you don’t. Software like AdvancePro makes information faster to collect and easier to view. More importantly though it gives you the tools you need to significantly reduce capital tied up in inventory.

INVENTORY
Inventory Reduction Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Total
Opening Inventory Value before AdvancePro $20,000 $20,000 $20,000 $20,000 $20,000 $20,000
Expected Monthly Sales Variance 0% 0% 0% 0% 0% 0%
Expected Reduction In Inventory 10% 10% 10% 10% 10% 10%
Inventory Value w AdvancePro $18,000 $18,000 $18,000 $18,000 $18,000 $18,000
Inventory Reduction Savings (Safety Stock) $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $12,000
Savings In Write Offs Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Total
Monthly Inventory Write Off $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $6,000
Expected Monthly Sales Variance 0% 0% 0% 0% 0% 0%
Inventory Write Off Reduction after AdvancePro 75% 75% 75% 75% 75% 75%
Annual Inventory Write Off with AdvancePro $250 $250 $250 $250 $250 $250  $1,500
Inventory Write Offs Cost Savings  $750 $750 $750  $750  $750 $750 $4,500
* Additionally, warehouse space requirements can be better controlled.
[/wptabcontent] [wptabtitle]Labor[/wptabtitle] [wptabcontent]Staff cost money so it only makes sense to make them as productive as possible. When paper driven processes are replaced with easy to understand software procedures your staff works more efficiently and you save money.

LABOR
Labor Costs Warehouse Shift 1 Warehouse Shift 2 Warehouse Shift 3 Warehouse Shift 4 Clerical 1 Clerical 2 Total
Number of Employees 2 0 0 0 2 0 4
Average Wage $15.00 $15.00 $15.00 $15.00 $14.00 $14.00 $14.50
# Hour Worked Per Day 8 8 8 8 8 8 8
# of Work Days per Month 22 22 22 22 22 22 22
Burden Factor 40% 40% 40% 40% 40% 40% 40%
Expected Monthly Sales Variance 5% 5% 5% 5% 5% 5% 5%
Salary Growth per Month 4% 4% 4% 4% 4% 4% 4%
Expected Labor Reduction w AdvancePro 20% 20% 20% 20% 20% 20% 20%
Labor Cost Totals Month 1 Month 2 Month 3 Month 4 Month 5  Month 6 Total
 Number of Employees 4 4.04 4.08 4.12 4.16 4.20
 Average Wage $14.50 $14.50 $14.50 $14.50 $14.50 $14.50
 # Hour Worked Per Day 8 8 8 8 8 8
 # of Work Days per Year 22 22 22 22 22 22
Burden Factor 40% 40% 40% 40% 40% 40%
Expected Monthly Sales Variance 1% 1% 1% 1% 1% 1%
Salary Growth per Month 0% 0% 0% 0% 0% 0%
Expected Labor Reduction w AdvancePro 20% 20% 20% 20% 20% 20%
Total Burdened Cost before AdvancePro $14,291 $14,434 $14,578 $14,724 $14,871 $15,020 $87,920
 Total Burdened Cost after AdvancePro $11,433 $11,547 $11,663 $11,779 $11,897 $12,016 $70,336
Inventory Write Offs Cost Savings $750 $750 $750 $750 $750 $750 $4,500
* Additionally, warehouse space requirements can be better controlled.
[/wptabcontent] [wptabtitle]Payback[/wptabtitle] [wptabcontent]As we said at the outset typical ROI in an AdvancePro run business begins in under three months. After that the savings accrue month after month. And you get your cash working for you instead of just sitting around in your inventory. If you’d like to see how soon you’d be making money by better managing your inventory you can download your version here.

AdvancePro Payback
Savings Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Total
Shipping Error Reduction Savings $357 $375 $394 $414 $434 $456 $2,430
Inventory Reduction in Safety Stock $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $12,000
Inventory Write-Offs Reduction $750 $750 $750 $750 $750 $750 $4,500
Labor Savings $1,429 $2,887 $2,916 $2,945 $2,974 $3,004 $16,155
Total Estimated Savings $4,536 $6,012 $6,060 $6,108 $6,159 $6,210 $35,085
Cost or Residual Cost of WMS $8,200 $3,664 $0 $0 $0 $0 $8,200
Net Savings -$3,664 $2,348 $8,408 $14,516 $20,675 $26,885 $26,885
[/wptabcontent] [/wptabs]